The true cost of owning a car is always far greater than just the actual price of the car.
When I bought my car in 2008 my credit still wasn’t that great. It wasn’t bad – I was still working on building it. Therefore the first car lot I looked at offered me an interest rate that I couldn’t afford to pay. I didn’t have the cash to pay for the car so I had to keep looking for an interest rate that made sense for me.
I kept looking until I found financing that suited my needs.
I ended up getting a deal on the car overall. The purchase price was around $18,000 and I also got credited $3,500 by trading in my previous car.
All in all my car payment ended up being $325 per month over a five year term. I hustled and paid the car off within two and half years.
However the price of a car is much more than the principal and interest on a loan. There are a lot of interesting infographics on this subject that can help you visualize the true cost of owning a car.
Here’s my take.
Unfortunately loan payments aren’t the only factors that weigh into the true cost of car ownership. If you’re thinking of buying a new vehicle here are some other factors you need to consider:
- Fuel Costs
These costs can add up quickly and you need to know what the final number will be before you purchase a new car.
You should also do your research on different loans and interest rates. One place you can check is Evolution Money.
Saving Money on Vehicle Related Expenses
My year as an insurance agent taught me how wildly different insurance premiums are for different vehicles. For example, if you are planning on purchasing a highly rated, yet moderately priced SUV your insurance shouldn’t be too terribly high. (As long as you’re driving record and credit score are good, that is.) But if you are purchasing a small sports car – watch out. You’ll pay the price when it comes to insurance.
You also need to consider the fuel economy of a new vehicle. The better the gas mileage the less you’ll spend on gas related costs.
Lastly, but most important to me is the quality of the vehicle. I am not a huge car lover. What I want is a car that I can drive for ten or more years and put at least 200,000 miles on. I don’t want to buy a new car every couple of years. I want a vehicle that lasts.
Maintenance is a huge component of making a vehicle last so figure that into your price as well.
What tips do you have for saving on the cost of car ownership?